Illinois Health Insurance Practice Exam

What is the purpose of Inflation Protection riders in Long-Term Care (LTC) insurance policies?

1. To limit coverage for pre-existing conditions

2. To provide additional medical services coverage

3. To allow insured individuals to purchase more insurance without proof of insurability

4. To offer guaranteed renewable policies

The correct answer is: To allow insured individuals to purchase more insurance without proof of insurability

The purpose of Inflation Protection riders in Long-Term Care (LTC) insurance policies is to ensure that the benefits provided by the policy will keep pace with the rising costs of care over time due to inflation. This rider is designed to help policyholders avoid the risk of underinsurance, as the cost of long-term care services can increase significantly as years go by. Choosing the option that suggests insured individuals have the ability to purchase more insurance without proof of insurability addresses a different aspect of long-term care policies. Such provisions are typically aimed at ensuring that individuals can increase their coverage as needed without undergoing additional medical underwriting, but they are not the main focus of inflation protection riders. Moreover, limiting coverage for pre-existing conditions, providing additional medical services, or offering guaranteed renewable policies are not purposes of inflation protection riders. These options each pertain to different elements of insurance policy design and consumer protections but do not address the specific need to adapt benefits to future inflation rates. Therefore, the correct response highlights the core purpose of inflation protection riders in maintaining the efficacy of LTC insurance benefits over time.